Greece: Latest working life developments Q4 2018

The launch of a new mechanism for determining the minimum wage for 2019, the positions of social partners with respect to an increase in the minimum wage, a social security subsidy for younger workers, and general strikes in the public and private sectors are the main topics of interest in this article. This country update reports on the latest developments in working life in Greece in the fourth quarter of 2018.

Application of new mechanism for determining minimum wage

A new mechanism for determining the minimum wage, which has been frozen at €586 since 2012, is being applied for the first time in Greece. An amendment to Law 4172/2013 established specific dates for the consultation period, which started on 21 August 2018 and is scheduled to end on 31 January 2019.

The new mechanism provides for the development of a step-by-step consultation process involving the social partners, specialised scientific research bodies and experts on the economy, and experts in labour planning, social policy and industrial relations. The consultation coordination committee consists of the president of the Mediation and Arbitration Service (OMED) as chairman, a representative of the Ministry of Labour and a representative of the Ministry of Finance. The stages have been planned within a strict timeframe.

The first stage involves the creation of a dossier with proposals, studies and memoranda from the social partners and scientific bodies (including the results of a meeting of the tripartite social dialogue meeting organised by the coordination committee). All material is then sent to the Centre of Planning and Economic Research (KEPE), which is supervised by the Ministry of Finance and responsible for drafting a proposal on the level of the minimum wage. Next, the Council of Ministers discusses the KEPE’s proposal and then the Minister of Labour (in cooperation with the Minister of Finance) decides on the level of the minimum wage.

As well as setting the new minimum wage at the end of January 2019, the sub-minimum wage of €510, applicable since 2012 for workers under 25 years of age, will be abolished.

By the end of October 2018, the social partners involved in the consultation had sent their proposals and the memoranda of their scientific bodies to the tripartite coordination committee. The social partners (with the exception of the Greek General Confederation of Labour (GSEE)) held talks with the coordination committee on 16 November. However, they did not discuss the rate at which the minimum wage should increase.

Social partners divided over minimum wage

There were significant differences among the proposals from social partners regarding the minimum wage.

The GSEE submitted its proposals, but did not attend the consultation meeting for political reasons. The confederation disagrees, both in principle and in terms of the procedure, with the new mechanism for determining the minimum wage. Instead, it seeks the statutory restoration of the minimum wage to €751 for all workers – as it was under the 2010 National General Collective Bargaining Agreement and before the statutory reduction of the minimum wage in 2012. The confederation also seeks to reintroduce the system where the minimum wage is determined after collective bargaining between the national social partners.

All the employer organisations expressed doubts and set requirements with regard to any increase in the minimum wage.

The Hellenic Federation of Enterprises (SEV) stressed that unless a wage increase is the result of improved productivity and non-wage competitiveness, it could create problems for many businesses. The federation proposed a comprehensive set of actions, including increasing the minimum wage in line with the average productivity of the economy, introducing a corresponding reduction in social security contributions and subsidising contributions for new entrants to the labour market.

The Hellenic Confederation of Commerce and Entrepreneurship (ESEE) proposed a gradual increase of the minimum wage over four years, to reach €751 by 2022, and stressed the need to reduce non-wage costs. It also called for the rationalisation of the contributions of self-employed professionals.

The Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE) argued in favour of reinstating the system for determining the minimum wage after collective bargaining between the social partners. The confederation believes that any increase in the minimum wage should be linked to a reduction in non-wage costs.

The Federation of Industries of Northern Greece (SVVE) argued in favour of a gradual increase in the minimum wage over three years, as long as the rate of increase is in line with the actual cost capabilities of existing businesses and is combined with a reduction in employer contributions for both employers and employees.

Social security subsidy for younger employees

As of January 2019, Law 4583/2018 will provide for the application of a programme to subsidise the monthly social security contributions of private sector employees up to 25 years of age. The subsidy will be granted by the Unified Social Security Fund (EFKA) and will cover 50% of the employer’s contributions to a main pension, or 6.6% of the employee’s gross earnings.

General strikes in the private and public sectors

Before the vote on the 2019 budget, the Civil Servants’ Confederation (ADEDY) and the GSEE called general strikes on 14 and 28 November 2018, respectively. The main demands of the ADEDY strikers were:

  • an increase in wages and pensions
  • the abolition of the 2016 law on pension cuts and the raising of the retirement age
  • a reduction of the tax burden

The main demands of the GSEE strikers were:

  • a reduction of the tax burden
  • the statutory restoration of the minimum wage to €751
  • the restoration of collective bargaining to determine the minimum wage
  • a fair and sustainable social security system without any cuts in pensions or benefits

Commentary

In the fourth quarter of 2018, following the end of the Third Economic Adjustment Programme for Greece, the consultation on raising the minimum wage and the abolition of the sub-minimum wage has given rise to conflict between social partners, despite the fact that the reduced minimum wage has remained frozen since 2012.

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